Beyond bigger pay cheques, what can keep Malaysia's frontline workers from Singapore? [WATCH]

KUALA LUMPUR: For Malaysian workers weighing whether to stay in Malaysia or cross the Causeway for a bigger pay cheque, the dilemma goes beyond Singapore's higher salaries.

Experts told Business Times that the decision also comes down to career prospects, with many workers in Malaysia struggling to see how their wages can rise meaningfully as they gain skills, experience and greater responsibilities.

The issue is particularly acute among frontline workers, many of whom are drawn to better-paying jobs across the southern border while local salaries remain clustered around the RM1,700 minimum wage.

Singapore remains the largest destination for Malaysians working abroad, according to the Statistics Department.

Its International Migration Statistics, Malaysia, 2025 report incorporates findings from a 2022 study of Malaysians working in Singapore.

The study found that 39 per cent of Malaysians working in the city-state were skilled workers, 35 per cent semi-skilled and 26 per cent low-skilled.

Among low-skilled workers, a category that includes some frontline occupations, 40 per cent earned between S$1,500 and S$2,199 a month, while another 34 per cent earned between S$2,200 and S$3,599.

Back home, low-skilled workers earned an average of RM2,128 a month in 2024, with a median salary of RM1,654, according to the Statistics Department.

For Malaysia, experts said the challenge is not only to raise the wage floor, but also to create clearer wage progression so workers have a stronger incentive to build their careers locally.

THE CAUSEWAY WAGE GAP

Khazanah Research Institute research associate Wan Amirah Wan Usamah said Singapore's higher wages reflected not only productivity but also deliberate policies to raise workers' pay.

In Singapore, the Progressive Wage Model (PWM) links wages to job levels, skills, training and career progression.

The system distinguishes between local workers covered by the PWM and those outside its scope. Local workers refer to Singapore citizens and permanent residents.

Firms employing foreign workers must comply with PWM wage requirements for covered local employees and pay those outside its scope at least the Local Qualifying Salary.

For Malaysia, Amirah said the RM1,700 minimum wage, implemented on Feb 1, 2025, remained an important wage floor but did not address the problem of workers remaining close to that level for years.

"Malaysia should not wait for productivity to rise before raising wages. Rather, wage growth and productivity growth should be pursued together," she said.

She said higher wages could themselves support productivity by improving worker retention, encouraging investment in skills and giving employers greater incentive to upgrade technology and work processes.

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WAGE PROGRESSION MATTERS

Jobstreet by SEEK Malaysia managing director Nicholas Lam said advertised salaries showed considerable variation among frontline jobs, highlighting the need for clearer wage progression.

Its first-half 2026 data put median monthly advertised salary ranges at RM1,700 to RM2,000 for cleaners, RM1,900 to RM2,500 for security workers, RM2,000 to RM2,500 for food and beverage (F&B) workers and RM1,800 to RM2,300 for retail workers.

About 62 per cent of cleaning advertisements had a minimum advertised salary at or below RM1,700, compared with 43 per cent for retail, 39 per cent for security and 17 per cent for F&B.

Candidate salary expectations also exceeded advertised starting pay by an average of 35 per cent for cleaning, 33 per cent for F&B, 53 per cent for security and seven per cent for retail.

Lam said the data underscored the importance of creating opportunities for workers to earn more as they gained experience, rather than relying solely on higher entry-level wages.

Across the frontline roles analysed, the median advertised minimum salary for experienced positions was around 23 per cent higher than for junior positions, while the upper end of salary ranges was about 25 per cent higher.

However, the degree of progression varied sharply.

Advertised salaries for experienced warehouse and manufacturing positions were around 40 to 44 per cent higher than junior levels, while cleaning, hospitality and retail showed little differentiation.

"A well-designed wage ladder can give employers a more structured way to recognise greater skills, experience and responsibility over time, while giving workers clearer visibility of how their earning potential can grow," Lam said.

He added that a structured wage ladder could be more sustainable than blanket wage increases because it linked higher pay to workers' skills, experience and contributions.

THE COST CHALLENGE FOR SMEs

But narrowing the wage gap with Singapore is no straightforward task for Malaysian employers, particularly smaller businesses already grappling with rising operating costs.

SME Association president Dr Chin Chee Seong cautioned that efforts to raise wages must take account of the wider cost pressures facing businesses.

He said many small and medium enterprises (SMEs) already paid above RM1,700 to attract and retain workers with the required skills and experience, although their ability to absorb further increases varied by industry and business size.

Moving quickly towards the RM3,100 living-wage benchmark could also have implications beyond employees currently earning RM1,700, he said.

"If the salary at the lower level is increased significantly, those earning above it will naturally expect their salaries to be adjusted as well to reflect their experience, skills, responsibilities and seniority," he said.

Chin said this wage compression effect meant a substantial increase at the bottom could raise payroll costs across an entire organisation, particularly for labour-intensive SMEs operating on thin margins.

The RM3,100 benchmark is used under the Government-linked Enterprises Activation and Reform Programme (GEAR-uP), taking into account industry wages and cost-of-living standards in the Belanjawanku 2024/2025 expenditure guide.

The latest GEAR-uP progress report showed that 91.7 per cent, or 189,817 of 206,987 directly employed Malaysian workers in government-linked investment companies and government-linked companies, earned at least RM3,100 a month.

BUILDING CLEARER WAGE PATHS

Amirah said Malaysia could draw lessons from Singapore's approach without replicating its wage model wholesale.

"Malaysia should take the principle of structured progression, rather than the precise Singaporean framework," she said.

Lam said employers also needed to look beyond salaries when making frontline jobs more attractive.

"Working hours, physical demands, location, working environment and opportunities for progression can all form part of the overall proposition," he said.

For SMEs, Chin said government support would be crucial if Malaysia moved towards a more structured progressive-wage system.

This could include co-funding of wage increases, grants, tax incentives and affordable financing for automation, digitalisation and training.

Such measures would help labour-intensive SMEs absorb higher payroll costs while improving productivity and creating room for further wage increases, he said.